Kautilya also known as Vishnugupta or Chanakya was the Prime Minister of Chandragupta Maurya (345-300 B.C.), the founder of Mauryan dynasty. Chanakya is believed to have crowned
Chandragupta Maurya as the ruler of Magadha. Chanakya established the Mauryan suzerainty over the whole of northern India. Kautilya or Chanakya is celebrated for his diplomacy and statesmanship. He is compared with Machiavelli for his political realism. He wrote Arthasastra, the oldest text on public administration in the world between 321 and 300 B.C.
Arthasastra consists of the following three parts:
¤ Arthaniti (economic policies) to promote economic growth;
¤ Dandniti (administration of justice) to ensure judicial fairness; and
¤ Videshniti (foreign affairs policy) to maintain independence and to expand the kingdom.
Kautilya discussed the State administration in detail in Arthasastra. Kautilya anticipated many modern administrative ideas such as organizational structure based on hierarchy and coordination between departments. Ancient Indian empires also had territorial divisions such as provinces, districts, villages and urban centres. Kautilya linked administration to the welfare of the people.
Kautilya exhaustively lists the duties and functions of the king, princes, ministers, and other state officials. The king and ministers have to observe strict discipline. Kautilya has prescribed strict code of conduct for ministers and administrators. In this regard, he anticipated modern ideas of codes of ethics and codes of conduct.
Kautilya believed in the adage “Yatha Raja Thatha Prajah” (As the King is, so will be the people”). Therefore, he laid down the condition that “an ideal King is one who has the highest qualities of leadership, intellect, energy and personal attributes”. According to Kautilya, the King needs to check the integrity of those whom he wants to appoint as advisers. Ironically, Kautilya also points to the risks in serving kings. Nowadays, these are discussed under leadership qualities. Both political leaders and public administrators need both skills and character to provide effective and productive governance.
He discusses the defence of the state boundaries, protection of the forts, and the manner of repulsing external aggression. TheArthasastraclassifieslegal mattersinto civil andcriminal.Kautilya outlines administration of justice with reference to evidence, procedures and witnesses. Kautilya strongly believed in Dandniti (punishment), but held that penalties must be fair and just, and proportionate to the seriousness of offence.
Kautilya believes that good governance is necessary for realizing the objectives of the state. This in turn needs proper administrative structures and processes. Kautilya suggests that governments should avoid extreme decisions and actions. Depending on exigencies, moderate or harsh actions should be taken. Moderate action relies on persuasion (Sama) and rewards (Dana). Harsh actions rely on punishments (danda) and on creating differences between one’s enemies (Bheda). Kautilya recognisesintrue modernpragmaticstylethat:“Sovereigntyis practicableonlywiththecooperation of others and all administrative measures are to be taken after proper deliberations.” Here, Kautilya shows qualities of flexibility and realism.
Kautilya seriously addresses the problem of corruption. He lists nearly forty methods by which officials can swindlegovernment funds.But he is sceptical of findingeasy solutions. It is as difficult, he says, to discoverthe honesty or dishonesty in an officer as it is to discover whether or not it is the fish
that drank the water. He adds: “It is possible to mark the movements of birds flying high up in the sky; but not so is it possible to ascertain the movement of government servants of hidden purpose.” He recommends strictest deterrent punishment to offenders.
Kautilya proposed that the salaries of the King and his officials should not exceed more than a quarter of the revenue. This idea of containing administrative expenditure is again very modern. He also proposed that ministers, including the King, should be paid for the service they render and not for their ownership of any resources.
In Arthasastra, economic governance is the end, and political governance is its means. Good governance presupposes political stability. He makes a revolutionary observation that stability will prevail if rulers are responsive, accountable, removable and recallable. Otherwise, there will be instability. Kautilya shows great concern to the need for a responsible administration. However, the provisions for recall and removal can apply at best to state functionaries and not to the monarch.
The kingdom was of course a monarchy, but it was given well structured administrative machinery. It was divided both functionally and geographically. Functionally, it contained various departments andthe heads of these departments were charged with clearly defined responsibilities. They had to run the department actively, efficiently, prudently and profitably. The king directed the administration with the help of a group of councillors, ministers and other high officials. They need to be carefully selected by the king after considering their character and background.
Kautilyarecommendspenaltiesforofficials of publicenterpriseswhichincurlosses,andrewardsfor those who earn profits. This focus is on husbanding of resources both for efficiency and for meeting the costs of running a country’s administration. In theeconomicsphere,the Arthasastraalso proposes a wage policy based on economic, social and political conditions. It must be just, and promote state interests. Kautilya considers the State as a party along with farmers, merchants and industrialists to labour or wagelegislation.Thus Arthasastrabalances theinterests of the concerned economicgroups. Although government is seen as a monopolist, the need for evolving a reasonable solution for proper utilization of resources is recognised.
Kautilya also recognised that the State has to ensure that commercial activities do not violate laws or harm the consumer. The State would have to provide measurement and quality norms for sale of products. Absence of trust and guarantee of quality would reduce commerce, and increase search and verification costs of commercial transactions. Kautilya explicitly states that “Adulteration of grains, oils, alkalis, salts, scents, and medicinal articles with similar articles of no quality shall be punished with a fine.” He provides punishments for selling inferior goods as of higher quality. He also fixes profit margins for home made and imported goods along with fines for exceeding the margins.
He also established explicit guidelines for the practice of the medical profession, incorporating ideas far in advance of his time.
Kautilya’s treatise is remarkable for foreseeing many modern economic ideas. He tried to establish guidelines for professional service providers like weavers, washer men, boatmen and shipping agents. He accepts the role of markets and of demand and supply when he observes: “in case of failure to
sell merchandise at the fixed rate, the rate shall be altered.” Kautilya recommended that the State should reduce excessive price fluctuation detrimental to commercial activities. He considered that an interventionist policyis needed to counter a situation ofglut in the market.Kautilya’sArthasastra is the first known treatise to discuss such concepts.
Agriculture dominated the economy in ancient times. Kautilya observes that cultivable land is better than mines because mines fill only the treasury while agricultural production fills both treasury and store houses. The Arthasastra refers to the functions of a Superintendent of Agriculture and says that the King should understand the intricacies of agriculture. Arthasastra recognises that taxes on agriculture and allied activities are necessary sources of State revenue. It advocates taxing the rich farmers. Kautilya also advocated proper systems of cropping pattern and of irrigation.
Kautilya discusses local and foreign trade which he considers the third pillar of economic activity. He emphasised that trade should be promoted by improving infrastructure. The state has to keep trade routes free of harassment by courtiers, state officials, thieves, and frontier guards. Kautilya distrusted traders believing them to be thieves, with a propensity to form cartels to fix prices, make excessive profits and deal in stolen property. He prescribed heavy fines for discouraging such offences by traders. He also recognisedthe usual trading arrangements andprescribedthe methods of resolving commercial disputes. He recommended measures for safety of goods in transit. He made the villages responsible for loss of goods in their area.
Kautilyarecommendsthat publicservants whileengaged in work, need to be closely supervised. Men are naturally fickle-minded and their temper keeps changing. Hence the agency and tools, which they make use of, the place and time of their work as well as the precise form of the work, the outlay, and the results shall always, be ascertained. Hence the chief officer of each department (adhikarana) shall thoroughly scrutinize the real amount of the work done, the receipts realised from, and the expenditure incurred in that departmental work both in detail and in the aggregate.
Arthasastra emphasises both on fraud prevention and fraud detection.
Arthasastrasuggeststhat theKing shouldappoint spies to secretlywatch overthe goings on in various departments. This suggestion will be regarded as rather unwholesome. Nowadays, we have systems of whistleblowers who expose frauds in the organizations they work. But setting spies on officers reminds one of a slogan from George Orwell’s 1984: “The bigbrotheriswatchingyou”.
The long list of areas of study which Kautilya gives reflects the progress being made at that time. Medicine, mathematics, military education, commercial education, statecraft, the arts, architecture are among the subjects for study. The eminent institutions of learning that flourished during the time included Nalanda and Takshila. In contemporary terms, this is the domain of human capital formation.
At this stage, we may note some interesting parallels between Kautilya’s prescriptions and the principles of public administration and corporate management. We need to remember, however, that Kautilya wrote against the background of an ancient monarchy.
¤ Arthasastra lays emphasis on creating economic infrastructure.
¤ It indicates areas of economy which need state regulation.
¤ It broadly lays down the content, modalities and personnel for regulation.
¤ It shows remarkable perception of market forces.
¤ Kautilyarecognisesthe significance of publicfinances.
¤ Kautilya describes elaborately the duties and functions of all the functionaries from top to bottom within the monarchy.
¤ The system relied on both penalties and rewards.
¤ Kautilya prescribes some rules governing private trade and commerce. But as the economy was primitive from a modern viewpoint, it did not have entities strictly comparable to modern corporates.
To sum up: the topics which Kautilya covers can be described in modern terms as - rule of law, judicial system, property rights, incentives for efficient and honest working of government officials, promoting moral and spiritual welfare, provision of infrastructure and capital formation. These are seen as means to strong nation building.